May 3 (Bloomberg) -- Sweden’s economy will expand this year
amid robust household demand, the European Union said.

The largest Nordic economy will grow 1.5 percent in 2013
and 2.5 percent in 2014, the European Commission said today in
new forecasts.

“Household consumption is likely to be the most important
source of growth in 2013,” the commission said. “Households
are becoming more optimistic, encouraged by stable house prices,
decreasing interest rates and the rise in the stock market.”

The Swedish central bank last month pushed back plans to
increase its main lending rate, in part as a strengthening krona
has reduced inflation. The Riksbank predicts it won’t increase
its rate from 1 percent repo until late next year.

The EU also forecast today that Denmark’s gross domestic
product will grow 0.7 percent this year and 1.7 percent next
year, also boosted by domestic demand. Finland, the only Nordic
country with the euro, will expand 0.3 percent in 2013 and 1
percent in 2014, the EU said.

Iceland, which has frozen talks on joining the EU, will
grow 1.8 percent this year and 3 percent next year, the
commission said.